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Third party research

Ferronordic: Germany still weighs while US performs - ABG

Ferronordic

This is a third party research report and does not necessarily reflect our views or values

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Germany weaker than expected, US stronger
We make more cuts in Germany
High leverage is the bottleneck for US expansion


Q4: Germany especially messy, US stable

Ferronordic reported Q4 net sales 10% above FactSet consensus, but adj. EBIT was SEK 19m vs. consensus' 24m, which also excludes one-offs tied to inventory write-downs in Germany (SEK -13m) and Kazakhstan (-4m). The US business continued its stable trend and beat our expectations by 9% on EBIT. However, the German business was especially messy in Q4, with an inventory write-down and a sell-off of old inventories at low prices that boosted sales but impacted margins negatively. Going forward, we expect the sales mix, and by extension margins, to be more in line with prior quarters, yet we note that even adjusting for these abnormalities, Germany was still weaker than we expected. Finally, group costs were lower than we expected, but we consider this to be within normal quarterly volatility, and it should not be extrapolated.
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